Franklin Templeton Reduces Fees and Adds Active Currency Management for Franklin Strategic Income Fund in Canada Français
TORONTO, March 18, 2019 /CNW/ - Franklin Templeton Investments Canada today announced enhancements to Franklin Strategic Income Fund to add significant value for investors, including an investment strategy change, the addition of an active currency management strategy, and a management fee reduction. In addition, the fund has received a lower risk rating.
"For Canadians looking for exposure to global fixed income, Franklin Strategic Income Fund provides diversified exposure across fixed income markets, while maintaining its attractive level of income," said Duane Green, president and CEO, Franklin Templeton Investments Canada. "To provide a more tailored investment experience for our clients, from a Canadian perspective, we are implementing active currency management by the Franklin Bissett fixed income team, in addition to reducing exposure to high-yield investments, to achieve lower overall fund volatility."
Investment Strategy Change
With a focus on offering diversified exposure across global fixed income markets, the fund's high-yield holdings will be limited to 40 per cent or less of total assets going forward, resulting in an increased emphasis on investment grade opportunities across fixed income sectors in which the fund currently invests. This may help reduce volatility, while maintaining an attractive income level for investors.
This strategy change, which will take effect on April 22, 2019, will also serve to differentiate Franklin Strategic Income Fund from Franklin High Income Fund, which has more of a focus on high-yield corporate bond investments.
Active Currency Management
Franklin Strategic Income Fund currently employs a passive currency hedging strategy, utilizing a 100 per cent hedge overlay.
As of April 22, 2019, the fund will implement a more active approach to its currency management with the Calgary-based Franklin Bissett fixed income team actively managing a portion of the fund's foreign currency exposure, based on their outlook on the Canadian dollar relative to the US dollar.
Management Fee Reductions
Effective April 1, 2019, the management fee for series A and F will be reduced by five basis points (bps), and a reduction of 10bps will be implemented for series PA, PF and O of Franklin Strategic Income Fund, as detailed in the chart below:
CURRENT |
NEW |
|||||
Series |
Mgmt. Fee |
Admin Fee |
Total |
Mgmt. Fee |
Admin Fee |
Total |
A |
1.25 |
0.21 |
1.46 |
1.20 |
0.21 |
1.41 |
F |
0.75 |
0.21 |
0.96 |
0.70 |
0.21 |
0.91 |
PA |
1.20 |
0.10 |
1.30 |
1.10 |
0.10 |
1.20 |
PF |
0.70 |
0.10 |
0.80 |
0.60 |
0.10 |
0.70 |
O* |
0.80 |
- - - |
0.80 |
0.70 |
- - - |
0.70 |
*This tier level is from C$200,000 up to C$2.5 million in investable assets. |
||||||
Risk Rating Change
The risk rating for Franklin Strategic Income Fund recently changed from "Low to Medium" risk down to "Low" risk.
Portfolio Management and Investment Process
Sonal Desai, EVP, chief investment officer and portfolio manager, Roger Bayston, EVP, director and portfolio manager, and Patricia O'Connor, VP and portfolio manager, Franklin Templeton Fixed Income Group, will continue to manage the fund. These portfolio mangers have 25, 33 and 23 years of industry experience, respectively.
Leveraging Franklin Templeton's global fixed income platform, the fund will continue to follow the same investment process, combining top-down and bottom-up perspectives, with the added feature of a more active approach to currency management leveraging the expertise of Franklin Bissett.
Franklin Strategic Income Fund seeks to provide investors with high current income and some long-term capital appreciation by investing primarily in fixed income securities issued in the United States and throughout the world.
About Franklin Templeton
Franklin Templeton Investments Corp. (known as Franklin Templeton Investments Canada) is a subsidiary of Franklin Resources, Inc. [NYSE:BEN], a global investment management organization operating as Franklin Templeton. Franklin Templeton's goal is to deliver better outcomes by providing global and domestic investment management to retail, institutional and sovereign wealth clients in over 170 countries. Through specialized teams, the company has expertise across all asset classes, including equity, fixed income, alternatives and custom multi-asset solutions. The company's more than 600 investment professionals are supported by its integrated, worldwide team of risk management professionals and global trading desk network. With employees in over 30 countries, the California-based company has more than 70 years of investment experience and over US$714 billion (over C$939 billion) in assets under management as of February 28, 2019. For more information, please visit franklintempleton.ca.
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Copyright © 2019. Franklin Templeton. All rights reserved.
SOURCE Franklin Templeton Investments Corp.
Media Contact: Sarah Kingdon, Corporate Communications, Franklin Templeton, 416.957.6191, [email protected]
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